June 03, 2014

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Toyota Motor Corp. announced Friday that its Indiana plant in Princeton will operate on a reduced production schedule in the coming weeks, but employees will not lose work because of it.

The company employs 4,700 workers in Indiana.

The move follows the March earthquake and tsunami that forced the Japanese carmaker to halt manufacturing in its home country due to shortages of parts and power.

"Over the next few weeks, [Toyota in Indiana] and Toyota’s other North American vehicle plants will operate on a reduced schedule, with production suspended on April 15, 18, 21, and 25," the company said in a press release. "Most of the company’s engine and component plants will follow the same schedule. Future production plans will be determined at a later date."

Earlier Friday, Toyota said it would resume car production at all its plants in Japan at half-capacity from April 18 to 27.

Toyota, the world's No. 1 automaker, said production at its 18 plants will then halt from April 28 to May 9, a period that includes Golden Week holidays when factories would normally close.

Toyota said the parts shortage has been gradually improving but it is still struggling to get around 150 types of parts. Toyota previously said there were shortages of about 500 types of components. The automaker has suffered a production loss of 260,000 cars from March 14 through to Friday.

"There are problems with parts supply. But each day, we are doing our utmost to improve the conditions so that we can deliver cars to many customers," Toyota president Akio Toyoda said at the automaker's Nagoya office in central Japan.

The March 11 disasters destroyed parts factories in northeast Japan, causing severe shortages for Toyota and other automakers. A nuclear power plant was crippled by the tsunami, and others were forced offline, causing an electricity supply crunch in the Tokyo and neighboring areas that is expected to continue for months.

The parts crunch has been felt around the world, from Malaysia to the U.K. to the United States. Industry analysts and U.S. dealers have said the auto plant shutdowns will cause shortages of some models, especially small and midsize cars, in the coming weeks

Some Toyota dealers in the U.S. said the popular Prius hybrid is now scarce because of high demand and the factory outages in Japan.

Toyota this week said it's inevitable it will be forced to temporarily shut down all of its North American factories. Apart from Toyota, Nissan and Ford Motor Co. have said several North American plants would be closed for some of April. Chrysler CEO Sergio Marchionne has said his company will see disruptions.

Honda Motor Co. said Friday it would add a week to production slowdowns at 11 North American factories because of parts shortages. The company said in late March that it would shut down assembly lines for several hours a day. Those temporary shutdowns will be extended to the week of April 18. It also expects disruptions after that.

Toyota on Friday said it remained unclear when it would return to full production in Japan. It hasn't decided production plans for after May 9, said spokeswoman Shiori Hashimoto.

Nissan Motor Co. said Friday it would resume domestic production at half capacity from April 11. Nissan's parts factory that was hit by the tsunami will begin limited production from April 18.

But Nissan said it is unclear how long it can keep running its entire Japanese operations — five auto plants and two parts factories — while supplies of components are tight.

Ryoichi Saito, auto analyst at Mizuho Investors Securities Co., said Toyota could report a loss for the April-June quarter if its production continues at half normal levels in the coming months.

"On and off production at limited capacity underscores the severity of parts shortage problems for Toyota," he said.

Toyota gets more than 90 percent of its auto components in Japan, according to Saito.

Toyota suspended all car production in Japan from March 14 to 26. Since late March it resumed limited production at a handful of plants.

Honda Motor Co.'s president Takanobu Ito said Friday he hopes to see a return to full production in Japan in a few months. Honda said last month it would restart production in Japan at half capacity from Monday.

On Friday, Honda said in a statement that it would add the week of April 18 to the time it plans to cut production hours at its North American plants, and the company said it expects further disruption in the future.

The company said at the end of March that it would shut down assembly lines for several hours per day due to parts shortages from Japan. On Friday, it said the shutdowns would be extended to the week of April 18, and disruption could occur beyond that week.

Honda has auto factories in Ohio, Indiana, Georgia, Alabama, Canada and Mexico. The company said none of its 21,225 factory workers in North America would be laid off.

Honda said most of the parts on cars made in North America come from the region, but some critical parts are made in Japan. Honda began limited production at a Japanese parts plant that supplies North America on Monday, but it's running at only half capacity.

Moody's Investors Service warned this week it may downgrade Toyota's credit rating due to the financial fallout from suspended car production.

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On Tuesday, April 24 IBJ & Indiana University will host Education-to-Employment (E2E) Convergence, a panel discussion focused on how Indiana can build a talent strategy around a more highly educated workforce. E2E will identify examples of successful partnerships to better integrate college graduates into our workforce from around the state. Register today.